Tag Archives: Obamacare

If You Buy Your Own Insurance in the Exchanges, Will You Receive a Government Subsidy? How Much Will it Be for Couple, or a Family of Five?

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ACA tax credits

 

 

 

 

 

 

Source:

No doubt you have read that if you are single, and earn less than 400% of the Federal Poverty threshhold (roughly $46,000 for an individual or $94,200 for a family of four) you will be eligible for a tax credit to help you cover the cost of insurance premiums.

But most of us don’t fit into one of those two categories. What if you are a couple, or a family of three? What happens if you have four kids?.

As the table above reveals, if a couple has  four children  and earns less  than $126,360 (400% of the FPL), they will be elibigle for the tax credits. Note: these credits are available only if you are self-employed, unemployed, or work for a company that does not offer affordable, comprehensive insurance. “Affordable” is defined as individual coverage that costs less than  9.5% of your income.

The credits are designed to make sure that no one who purchases their own insurance is forced to spend more than 9.5% of their income on health care. For instance, according to the Kaiser Family Foundation’s (KFF’s) new subsidy calculator, coverage for a 35-year-old couple with three children might cost $13,101./(This is an estimate; actual premiums will vary depending on where you live. Healthcare is much more expensive in some states than in others. ) If the parents earned roughly $100,000 a year, they would be asked to pay $9,500 toward their insurance and would receive a tax credit of $3,626.

This assumes that they purchase a “silver plan” which pays for an average of 70% of covered benefits. The family would owe the other 30% in  the form co-pays and deductibles. But keep in mind that preventive care is free, there are no co-pays and the deductible does not apply.

Assuming they need care other than preventive care, total out-of-pocket spending would be capped at $12,750, even if the entire family wound up in a car accident, three of them were hospitalized, and two needed surgery.

If they preferred, the family could purchase a less expensive Bronze plan which would pay for 60% of covered benefits. Their co-pays and deductible would be higher, but once again, preventive care would be free, total cost sharing still would be capped at $12,700, and the premium for a Bronze plan would be lower: KFF estimates that a family of five earning $100,00 would still receive a subsidy of $3,626 and their share of the premium would be just $7,253.

Why is the Government Subsidizing Households That Earn more than $125,000?

 If people choose to have four children, that certainly is their business. But why should I help pay for their healthcare?

The answer is two-fold:

First, people don’t necessarily choose to have 4 children –or more. Some couples are surprised (not to mention overwhelmed) when they disccover that they are having twins or triplets. 

Secondly as a society, we care about children. We don’t want any child to go without needed care.

But there also is a pragmatic reason for supporting large families. If those children don’t receive preventive care such as dental checks as well as  timely treatments when they are sick, down the road, we as a society will pay the price. The health of the population will play a major role in determining how productive we, as a nation, are.  

 

 

 

 

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Obamacare: In 2014 Will Workers Be Able to Afford the Health Benefits Their Employers Offer?

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Recently AP floated a story that spread like a virus. Within a day it was picked up by Yahoo!,  the Wall Street Cheat Sheet, and the Washington Post  where it was headlined “Affordability Glitch.”

Thanks to a “wrinkle” in the law, the story warns, Obamacare may hurt many of the people it is supposed to help, by making “health insurance unaffordable for . . . workers employed by restaurants, retail stores, hotels, and small businesses.”  The law is explicit, AP explains: “companies that employ 50 or more workers must offer ‘affordable’ coverage to those working more than 30 hours per week — or face fines. ‘Affordable’ health insurance, as defined by the legislation, means that premiums can cost no more than 9.5 percent of an employee’s income. . . .    . . . For low-wage workers, many of whom live paycheck to paycheck and earn barely enough to cover basic necessities 9.5% represents a lot of money.”  

True, but the fact that the law says premiums can equal 9.5% of income doesn’t means that employer-sponsored insurance will cost 9.5% of a worker’s pay.

Nevertheless, Yahoo! conjures up a hypothetical employee who will be left out in the cold: “Take, for example, a restaurant worker who makes $21,000 per year. A premium that costs 9.5 percent of this income would run $1,995 for the whole year, or $166.25 per month.  How could this employee possibly shell out nearly $2,000 a year for insurance?”  

He will have to turn down his employer’s offer, and then the government will demand that he pay a penalty because he didn’t buy insurance!
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Will Obamacare Kill Jobs? More Fictions and Facts

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— Fiction: No doubt, you’ve heard that Obamacare will cripple small businesses, the “engine of job growth in America.” In 2014 employers with more than more than 50 full-time workers will have to provide insurance—or pay penalties. If more than 30 of their workers go to the individual Exchanges and receive government subsidies in the form of tax-credits, the business will have to help cover those subsidies by paying a fine of $2000 to $3000 per employee.

Obamacare’s critics speculate that many employers will stop hiring, so that they have no more than 49 full-time employees.

–Fact: As of 2010, there were roughly 5.7 million small employers in the U.S. (defined as those with fewer than 500 workers.) Ninety-seven percent of them have fewer than 50 employees. In other wrods, Obamacare’s employer mandate applies to only 3% of small businesses.

And 99% of those  with more than 50 employees already offer insurance. The employer mandate will affect just a tiny sliver of small companies.  Lawmakers understood this when they wrote the legislation.

–Fiction: In 2014, many small employers will trim full-time workers’ hours and we will become a nation of part-time employees.  Small business owners know that if they have fewer than 50 full time workers (averaging 30 hours a week) they won’t have to pay a penalty, and their workers can go to the Exchanges where individuals can purchase their own insurance, and receive those generous tax credits.

–Fact: This bit of fear-mongering overlooks the fact then when the government counts “full-time employees” it doesn’t just count heads, it counts hours.The law says that the firm must offer insurance if it has 50 full-time “or full-time equivalent employees.”

Here is how the rule works: If a business has 50 full-time employees working 30 hours a week and cuts 10 back to 15 hours, it will have only 40 full-time employees. But it will have to hire more part-timers to cover holes in the weekly schedule.

Assume the company hires 20 new part-time employees, each working 15 hours a week. Because they will be putting in 300 hours a week the government will count them as ten “full-time equivalents.” Add those ten to the remaining 40 full-time workers, and the company then will have 50 full or “full-time equivalent’ -employees.

The business won’t have to insure the 20 part-timerswho work only 15 hours, but it will have to insure the 40 who work full-time—or pay the penalty..

This fiction also overlooks why employers offer benefits.   Research reveals that when a business insures workers, it enjoys higher productivity, better morale and lower absenteeism.

This explains why roughly 95% of companies with more than 30 employees provide health insurance.

 —Fiction: Chain restaurants, retailers and hotels can easily cut thousands of workers to part-time so that they don’t have to insure them.

— Fact:  Organizing a  company’s  hiring and staffing around making sure that it won’t have to offer health benefits is hardly a brilliant business plan

Imagine what cutting full-time workers’ hours will do to morale and productivity– not to mention customer service. 

 Consider this  Wal-Mart has stopped hiring full-time employees, and is relying on part-timers and temps. As a result, Forbes reports that Wal-Mart is experiencing  “complaints about understaffed stores with empty shelves and inventory piling up in warehouses and back rooms.”. 

“It seems even Wal-Mart can’t operate on such a lean staff,” writes Forbes contributor Laura Heller, who describes herself as “a retail geek/expert.”

“Dirty stores, parking lots in disarray and out-of stock products don’t bode well for sales and stores can’t operate that way for long periods.”

Meanwhile, Target, one of WalMart’s chief competitors, continues to offer health care benefits to part-time employees, even though the ACA doesn’t require that it insure them.
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Obamacare– Fear-Mongers Poison Minds; Hatred Blinds

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Judith Mayer Lynn, uninsured and battling breast cancer, should be a fan of the Affordable Care Act. Instead, Bloomberg  reports, she know little about it. When Bloomberg interviewed the 56-year-old she was unaware of subsidies in the law that will help people like her buy coverage in 2014,. “Lynn didn’t know the Affordable Care Act requiresthat insurers to pay for prescription drugs, hospital stays and other services she’s spent the last two years scrimping to afford. Nor did she realize she can no longer be denied a policy due to her illness”.

When told of the benefits, “Lynn remained unconvinced, skeptical of insurers and government alike. ‘It’s a joke,’ she said. ‘There’s going to be loopholes in all of these provisions.’”

If you showed Lynn the list of “essential benefits” that insurers will have to include in the policies they sell to people like her, could you persuade her to read the list—and explain where she saw the holes? Probably not. Her mind is closed.

In an interview at an Access to Healthcare office in Las Vegas, Lynn said she was unaware of those benefits — and didn’t trust Obama to produce them anyway.

                                            The Poison: Hatred

Perhaps I shouldn’t be surprised. We live in a nation where in 2009,  a U.S. Congressman felt free to shout out “You Lie” during a  televised presidential speech to a joint session of Congress.   

(President Obama had just said that the legislation would not mandate coverage for undocumented immigrants. This is, of course, correct.  South Carolina Rep. Joe Wilson (R) later apologized.)

Yet that didn’t stop another Congressional Republican from calling out the President earlier this month. In a scathing speech on the floor of the House, Rep. Jim Bridenstine (R-OK) derided President Obama as a “dishonest, incompetent, vengeful liar” who lacks a “moral compass.” Bridenstine cited HHS Secretary Kathleen Sebelius’ efforts to promote enrollment in the Affordable Care Act as one reason that President Obama is “not fit to lead.”

Bridenstine didn’t apologize. Instead, the next day he told a talk show host that he had “gotten great encouragement” for his remarks from fellow Republicans. /

I have followed U.S. politics for many years. Never have I seen a president so hated—not Nixon, not LBJ at the height of the War in Vietnam..

       Politicians Are Not Alone in Teaching Americans Not to Trust Obamacare

Lynn recalls one of her surgeons telling her that he was leaving the business because the health-care law dictates what he can charge patients. This, Bloomberg notes, is “something the legislation doesn’t do. “

Why would a surgeon claim that the Affordable Care Act will be setting his rates? Presumably he reads newspapers.  How could he be so uninformed?

“There is a lot of distrust,” Sherri Rice, chief executive officer at Access to Healthcare explains. When her nonprofit group began asking members about the ACA last month, about half knew little about its provisions and another quarter were “furious” about it, she told Bloomberg.

Such anger makes it difficult to think clearly—or take in information.  This may explain why Lynn’s surgeon thinks that under the ACA he will be told what he can charge patients. Perhaps he, too, is so “furious” that the facts don’t register. Hatred blinds.

 
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Who Will Sell Insurance In the Exchanges? Non-profit Insurers.For Consumers, This is Great News– Part 1

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You may have heard that big for-profit health insurers are taking a “wait-and-see” attitude toward the Exchanges –the one-stop marketplaces where small businesses and individuals who don’t receive benefits at work will be able to buy insurance.

Both UnitedHealthGroup, the nation’s largest carrier,  and Aetna the third-largest, have told analysts that their involvement in the health insurance marketplaces across the country will depend on whether they find them “financially viable” for the companies  WellPoint, Humana and Cigna also have indicated that they will participate in a “limited” number of markets. /

Aetna is being particularly coy.  On a conference call with investors and analysts just three weeks ago Aetna officials said that if they don’t like the way the market is shaping up they “might pull their products from the online marketplaces at the last minute.”

Is this meant as a threat? One can only imagine the chaos that would ensue if Aetna began pulling out of state Exchanges at the 11th hour. The remark demonstrates how little concern Aetna has for its customers.

 Doomsters say Too Few Plans Will Mean Higher Premiums

Many have been predicting that the Exchanges will fail because the big names won’t be participating. They point out that in Illinois “only six insurance carriers have told the state of they want to sell health policies on the state’s online s marketplace. “   The  critics warn that if not enough companies offer coverage in the Exchanges, consumers won’t have enough choices, and  their won’t be enough competition to keep a lid on prices.

Former insurance executive turned industry consultant Robert Laszewski  is quick to pounce on “the Illinois numbers” as “an early indicator that insurance companies are backing away from full participation in the online marketplaces. . . I’m hearing that from other carriers in other parts of the country as well” he told Chicago’s Crain’s Business. “They are terribly fearful that if there’s a poor launch (of the marketplaces) they’re going to get blamed for a mess.”   

Laszewski has been predicting “sticker shock” in the Exchanges for some time. What he ignores is that what matters most is not the number of plans available in the Exchanges, but how good they are.  Quality, not quantity is what counts. 

 In the end, “robust competition” does not depend on the free-market chaos of 20 or 25 plans vying for market share. It turns on a few good companies offering transparent information. Then, and only then, can consumers compare them and make rational decisions.

                              California Disproves the Critics

California already has demonstrated that the doomsters are wrong.  Two days ago, the state unveiled the offerings that will be available in its Exchanges—along with the prices.  Nearly three dozen plans had submitted bids, and 13 were selected.  (California exchange officials rejected bids that were too expensive, or failed to include enough choices of doctors and hospitals.)  

Sure enough, the brand name for-profits are not going to peddle their products in the California Exchange.  

But as it turns out, they weren’t needed to create a competitive affordable market that offers Exchange customers a wide range of choices. As I discuss below, Kaiser, which ranks #1 in the state for both quality and consumer satisfaction will be part of that marketplace.

In  every region in the state, individuals who don’t have health benefits at work will be able to purchase comprehensive insurance that offers free preventive care, covers the 10 essential benefits, and caps out-of-pocket spending for less than $4,000 a year. (In North Los Angeles County, for example, Kaiser will offer a Silver Plan for just $294 a month.)  This is significantly lower than expected: the Congressional Budget Office (CBO) had estimated that such comprehensive coverage would cost $5200.

Four thousand dollars might sound pricey for a middle-class family, but keep in mind that individuals reporting modified adjusted gross income (the number at the bottom of the first page of your tax return) of less than $45,960, as well as families earning as much as $94, 200 will be eligible for federal subsidies that will help them cover their premiums.

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Obamacare’s Opponents Spread Doubt and Confusion About Small Business Exchanges

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In the past, I have reported on misinformation about healthcare reform going viral. It has happened again, and this time, reform’s critics have outdone themselves.

In March, the Obama administration proposed revising the rules governing insurance marketplaces or “exchanges” where small business owners will be able to pool their buying power, and purchase affordable, high quality insurance for their employees. The change to the rules is small, and it is temporary.

Nevertheless, Obamacare’s critics pounced, and soon began distorting what the administration said. USA Today quoted the Chamber of Commerce (long a foe of reform), claiming that the small business exchanges “will be of little or no value to employers, or by extension, their employees.”

                                     How Small Business Exchanges Lower Premiums

Before considering the charges, let’s review what the health reform law’s Small Business Health Options (SHOP) exchanges offer. Today, insurers charge small companies 18 percent more because the administrative costs of hand-selling policies to small groups are high.

But in the SHOP Exchanges, small businesses automatically become part of large groups. Some will qualify for tax credits.  The Congressional Budget Office (CBO) estimates premiums will fall by 2 percent to 11 percent. Meanwhile those premiums will buy far better coverage. (Policies sold in the SHOP Exchanges will have to meet the high standards set for plans in the individual exchanges).

                             The Proposed Change: What the Administration Actually Said

Now consider the proposed change. Originally, the Affordable Care Act called for opening SHOP exchanges to employees in 2014. First, the employer would choose a tier of insurance. (Bronze, Silver, Gold or Platinum tiers will pay 60 percent to 90 percent of an average group’s covered benefits, with any individual’s out-of-pocket spending capped at roughly $6,000.) Employees would then pick plans from that tier.

But Washington had assumed that states would be eager to help their small businesses by setting up exchanges. Today, only 16 states and the District of Columbia have begun. Now the administration realizes it will need more time to set up the IT that millions of employees will need to navigate exchanges in 34 states.

 HHS still plans to open the exchanges in 2014, but only to employers. They will survey the many plans available, and then pick one for their employees. “Employee Choice” will be delayed – but just for one year. And the postponement will apply only to the 34 states that have not set up exchanges. In 2014, the other 16 states and D.C. can (and probably most will) open exchanges to employees.

“Nearly 40% of small businesses in this country do business in the 17 states implementing their own exchanges,” observes John Arensmeyer, president of Small Business Majority (SBM), a non-profit advocacy group. And “starting next year, small employers will still be able to pool their buying power in the exchanges, giving them the kind of clout large businesses currently enjoy.”

“This is not a failure, it’s a bump in the road,” Small Business Majority’s Rhett Buttle told me.

                                               The Attack Begins

Nevertheless, Robert Laszewski, a long-time health reform critic, jumped on the bump, telling Modern HealthCare: “Offering a single employer all of the exchange options is a complex undertaking . . . a delay means that the exchange isn’t going to offer any advantage over the employer simply staying with their existing insurer.”

Laszewski suggests that “a single employer“ will not be able to choose from all of the exchange options.” This is simply not true. Business owners will choose from all plans in the exchange. As for an employer keeping his “existing” coverage – why would he do that? The policies in the exchanges will offer better coverage for less.

Above, the opening of a post that I wrote for HealthInsurance.org.   To find out more about why Lawzewski’s is bashing small business Exchanges–and what what Time’s Joe Klein, the Wall Street Journal and Wonkblog’s Sarah Kliff had to say– read the entire post on HIO.   You’ll also find out  why some of us think that the importance of “consumer choice” may be “way overblown.”

Who is Douglas Holtz-Eakin and why is he saying such terrible things about health reform?

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Today, the House Energy and Commerce Committee’s Subcommittee on Health will hold a hearing entitled: Unaffordable: Impact of Obamacare on Americans’ Health Insurance.  (Always nice to know that our elected representatives are keeping an open mind.)

Prominent on the list of witnesses: “Douglas Holtz-Eakin.” Even before reading his testimony, I knew what Holtz-Eakin would say: young, health Americans should brace for “sticker shock.”  Conservatives like Holtz-Eakin tend to stay on script. However stale the rhetoric, they firmly believe that if you repeat a sound-bite often enough, people will believe it.                                     

                                        Who is Douglas Holtz-Eakin?

If you recognize the name, it’s probably because Holtz-Eakin has become a familiar figure in the mainstream media, quoted in the New York Times, writing Op-eds for Reuters and Politico.com, and appearing, not only on Fox Business News, but on CNN and the PBS’ Newshour.

Alternatively, “Holtz-Eakin” may ring a bell because he served as a member of George W. Bush’s Council of Economic Advisers (CEA), and as Director of Bush’s Congressional Budget Office (CBO.)

In a remarkably candid 2011 interview, Holtz Eakin recalled his tour in the Bush administration:

“Going into the summer of 2001, things were getting worse. . . When we first went in and talked to the President, Glenn [Hubbard] and Larry Lindsey said, ‘Mr. President . . . We’re probably not going to run a surplus on budget.  We’re going to run a deficit.”

Bush’s reply: “We’re not going to run a deficit. If you come in here with a deficit, you’re both fired. Go fix it.’”

“We ended up running a budget surplus of one billion dollars,” Holtz-Eakin confided, “driven by gimmicks of remarkable proportions.”
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Ignore the Hype: Why Health Insurance Premiums Won’t Skyrocket in 2014

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Health reform’s critics are sounding the alarm: in 2014, they say, health insurance premiums will climb, both for small businesses and for individuals who purchase their own coverage. “Hold onto your hat,” writes  Bob Laszewski, editor of Health Care Policy and Market Place Review. “There Will Be Sticker Shock!” 

Laszweski’s piece has been cross-posted on popular blogs, and his forecasts have been popping up in mainstream newspapers, including  USA Today.  Such wide circulation makes Laszewski’s warnings worthy of attention, and compels me to ask an important, if impertinent, question: Is what he says true?

Cherry-picking a CBO report

The Congressional Budget Office expects  that the ACA will have a “negligible” effect on the premiums that large employers pay for insurance, and most experts agree. But in the individual market, Laszewski claims that CBO projections show “10% to 13% premium increases.”

Here is what the CBO actually said:

“About 57 percent of people buying [their own] insurance would receive subsidies  via the new insurance exchanges, and those subsidies, on average, would cover nearly two-thirds of the total premium.

“Thus, the amount that subsidized enrollees would pay would be roughly 56 percent to 59 percent lower, on average, than the premiums charged under current law.”

Wait a minute: “56 to 59 percent lower?” Where does Laszweski get “10 percent to 13 percent higher?

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Can U.S. Businesses Afford Obamacare?

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No doubt you have heard that the Olive Garden, Denny’s and Papa John’s Pizza all are slapping an “Obamacare surcharge” on the price of their products.  They claim they have no choice.

But the news that Americans might pay 50 cents more for a mediocre $10 meal at the Olive Garden is not what bothers me most. Since President Obama was re-elected each of these restaurant chains have announced that they also plan to cut many full-time workers’ hours back to less than 30 hours a week in order to duck the cost of providing health care benefits.. This means that employees who are now working 40 hours a week will have to look for a second job—or find a way to support themselves on less than three-quarters of their current salary.

Michael Tanner, a fellow at the conservative Cato Institute, argues that companies outside the restaurant business also will be forced to down-size. Just a few days ago, Tanner wrote: “While restaurants are especially vulnerable to the cost of Obamcare other business are being hit too. For example, Boston Scientific has announced that it will now lay off up to 1,400 workers and shift some jobs to China. And Dana Holdings, an auto-parts manufacturer with more than 25,000 employees, says it too is exploring ObamaCare-related layoffs.”

Obamacare will  “keep unemployment high,” Tanner claims, because under reform legislation, businesses that have at least 50 employees working over 30 hours a week are expected to offer their workers affordable health insurance. If they choose not to, and more than 30 of their employees qualify for government subsidies to help them purchase their own coverage, the employer must pay a penalty of $3,000 for each worker who receives a subsidy— up to a maximum of $2,000 times the number of the company’s full-time employee minus 30. (The Kaiser Family Foundation offers an excellent graphic explaining the rule.) 

By paying the fine, the employer is, in effect, paying a share of a tax credit that would cost the government anywhere from roughly $1,700 for a single young worker  to over $12,000 to help the average 35-year-old worker who has a spouse, two children, and reports $35,000 in total household income.

Conservatives like Tanner argue that that is unfair, and that small businesses– “the engine of job growth”– will be hit hardest.  

What they  don’t do is look at the math:

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Health Care Reform: Stage Two

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Last week, my editorsat  the Health Insurance Resource Center (Healthinsurance.org) challenged me to write a letter to President Obama and suggest what he should do next to advance reform. They were looking for a “new, big idea.”

After thinking about it, I concluded that we don’t need another big idea.  The Affordable Care Act (ACA) contains a great many ideas. Now we need to implement them.

Critics of Obamacare have suggested that as we approach 2014, Washington needs to turn its attention to containing healthcare costs. In particular, they suggest that Medicare is too expensive.

But the fact is that if you read the legislation (and I have, more than once) , you’ll find that it already cuts Medicare spending by some $716 billion. And it does this without cutting medical benefits and without slashing Medicare’s reimbursements to doctors.

In addition, the ACA includes many carrots and sticks designed to encourage hospitals and doctors to provide more efficient, less costly, safer care. In the future they won’t be paid for doing More;  they’ll be paid for doing it Better–for Less. Only health care providers have the power to truly reform our wasteful health care system. Already we’ve seen some evidence that they are responding to the incentives: Medicare spending has slowed.

Finally, and most importantly, President Obama should reject any attempts to re-negotiate the ACA during budget talks. The ACA is not on the table. It is now the law of the land. The American people do not want to listen to politicians continue to debate healthcare. (They want their elected leaders to focus their attention on just one Big Idea: Jobs)

The election gave the president the green light to go ahead with reform.. Now, the administration needs to implement the legislation to so that we can see what works and what doesn’t. This will take time–but only then will we be in a position to revise, refine and improve on reform legislation. .

I hope you’ll read the entire post--and come back here to comment.